London’s got its fair share of tech accelerators launched by unusual backers from non-profits, to a Spanish telecom giant, to England’s public service broadcaster — a London-based investor even remarked a few weeks ago at an event that London was experiencing an “accelerator arms race.” But one of the accelerators that continues to turn heads — because of its focus, backer, office space, leader and grand plans — is Level39, an accelerator owned by the Canary Wharf Group, the real estate company that dominates the once bustling docks of East London.
While the docks were closed in the 80s, the area now houses some 90,000 commuters who work in London’s largest banks and financial services companies. Canary Wharf, which is also the de facto name of the region, contains many of the tallest buildings in the U.K., including one of the tallest at One Canada Square. Traverse across the grand lobby, past the security guards, up the swift, silent elevator and into the 39th floor of One Canada Square, and you’ll find Level39, which officially opened this Spring — just a few months ago.
It’s an ostentatious place to run a scrappy young tech startup. The views rival the ones from the top of the London Eye, but are actually almost twice as high. It’s about as opposite you can get (in placement and atmosphere) from one of East London’s other tech hubs: the cafe in the bottom of Google London Campus, which is filled with entrepreneurs just out of school looking for free space and socializing.
But to Level39′s CEO Eric Van der Kleij — who was the former CEO of the U.K. government’s Tech City initiative — Level39 is a place for decidedly more “grown up” startups, many of which have come out of the banking and financial services sectors. Level39 has been almost wholly focused on accelerating financial services (fintech) startups but has also opened up its doors to “retail tech” startups, which is like fintech for consumers (Canary Wharf has a lot of shops that can act as testing grounds for payment products).
Down the road, Level39 also plans to launch a focus on “future cities” startups, which are using internet-of-things tech like sensors and data management tools to make the built environment more efficient and smarter. During an interview Van der Kleij points out one of the sweeping windows to construction going on at 25 Churchill Place, which could be the future home to part of the future cities initiative.
But for now, Level39 is full. The office space and desks — other than those in the hang out pantry area — are mostly taken up, and the first seven startups in the program are knee-deep in trying to scale their businesses. Van der Kleij says Level39 had 280 companies apply to participate, which “far exceeded” even his high expectations.
Some of the first batch of companies include cyber monitoring startup Digital Shadows, social investment network eToro and transfergo, which is a democratized way to transfer money. Many of the companies are helping the financial sector figure out how to use data to manage risk better, increase transparency and help meet new regulator requirements — something which clearly is at the top of the minds of the financial services industry as of late.
Financial cybersecurity, in particular, is something that Van der Kleij knows more than a bit about. Before he ran Tech City, he founded and led a startup that built credit card fraud detection systems. If you’ve ever gotten a call asking about unusual activity on your credit card, odds are it went over Van der Kleij’s system, he says.
It’s also this background as an entrepreneur that makes the Level39 accelerator a little different than others. Level39 doesn’t take equity in the startups it works with. Van der Kleij, who has the giddiness and showmanship of a serial entrepreneur, calls it “probably the most benign engagement for a startup” and explains that, because Canary Wharf Group is interested in further developing the appeal to the tech community, it’s created this “reasonably soft landing.”
So how does the accelerator make any money? Well, partly from corporate sponsors, like Accenture and Dassault Systèmes, for which Level39 creates custom accelerator programs that cover the bills (to clarify Accenture organized their own accelerator but hosted it at Level39). Companies like Accenture and Dassault work in Level39, too, amongst the nimble innovative startups, and reap the benefits that proximity and co-working can provide. But in reality, the accelerator doesn’t have to make much money — it’s owned by a huge property firm, and it just needs to cover its basic costs.
Tech City Sprawl
Level39 seems to have met its own goals for success, which Van der Kleij says has been applications (280), startups growing and asking for more desks (check), and companies eventually scaling and getting customers. But some question if the end goal of making the Canary Wharf area another tech hub in London will be all that easy.
The area has a more traditional, corporate feel for the banker set, which seems at odds with the startup crew. It’s harder to get to than the square mile around Shoreditch, and it lacks in the after hours activities, which have seemed to galvanize East London around early evening “Drink Abouts” and meet-ups. Even compared to the Tech City-led growth of startups in Shoreditch, Canary Wharf appears to be less organic and more of a top-down active creation.
But that doesn’t mean it might not work. Van der Kleij helped do it with the original Tech City. And clearly the accelerator has gotten enough attention from the financial services startup community. Its even starting to act as a hub for European startups focused on the financial sector, says Van der Kleij.
Level39 is also working on that whole lack of after hours socializing thing. It’s got a club lounge that it will launch next month that will be a private eating, drinking and meeting space for investors and executives. And, if Level39 continues to grow into its future cities initiative and beyond, it’ll have helped the Canary Wharf Group create another lucrative tech community within its many walls.
We think the London tech ecosystem is so interesting that we’re holding our annual Structure:Europe event on September 18 and 19 in London and featuring London’s cloud and data startups.
Updated at 10:15AM British Time on August 29th, to clarify the nature of Accenture’s accelerator program with Level39.